How to Manage Individual Employee Compensation

This guide walks you through managing compensation for individual employees step-by-step. Learn how to set up, edit, and track employee compensation including salary, hourly rates, and compensation changes with full audit trails.

Who this is for: HR Administrators, Business Administrators, and Managers with compensation access
Time needed: 10-15 minutes per employee
Prerequisites: Compensation Management enabled, appropriate user permissions

🎯 What You’ll Learn

• How to view and edit individual employee compensation
• How to use real-time salary ↔ hourly rate conversions
• How to set effective dates and document changes
• How to track compensation history and changes
• Common compensation scenarios and best practices

📋 Before You Start

Required Access:

• Business Administrator, HR Administrator, or Manager role
• Compensation Management app enabled
• Employee exists in User Management system

What You’ll Need:

• Employee’s current compensation information
• Effective date for any changes
• Reason/justification for compensation changes
• Approval (if required by your workflow settings)

🚀 Step-by-Step Guide

Step 1: Access Employee Compensation

1. Navigate to Admin → Compensation Management
2. You’ll see the main employee list with current compensation data
3. Use the search bar to find a specific employee, or browse the list
4. Click View or Edit next to the employee’s name

💡 Tip: Use the filter options to quickly find employees by compensation type, salary range, or department.

Step 2: Understanding the Compensation View

When you view an employee’s compensation, you’ll see:

Current Compensation Summary:

• Employee Information: Name, job title, department, hire date
• Compensation Type: Salary, Hourly, Commission, or Contract
• Current Compensation: Annual salary or hourly rate
• Pay Frequency: How often the employee is paid
• Currency: Currency for compensation (default: USD)
• Effective Date: When current compensation became effective
• Last Updated: Date and user who made the last change

Compensation History Section:

• Complete history of all compensation changes
• Change dates, amounts, and reasons
• User who made each change
• Approval status and approver information

Step 3: Editing Employee Compensation

Click the Edit button to modify compensation details:

Compensation Type Selection

Choose the appropriate compensation type:

Salary Employees:

• Fixed annual compensation
• Paid regardless of hours worked
• Common for full-time, exempt employees
• System will calculate hourly equivalent

Hourly Employees:

• Paid based on hours worked
• Subject to overtime calculations
• Common for part-time and non-exempt employees
• System will calculate annual equivalent

Commission Employees:

• Base salary plus commission structure
• Both salary and commission tracking
• Complex compensation calculations

Contract Employees:

• Project-based or temporary compensation
• Flexible rate structures
• May include both hourly and project rates

Real-Time Compensation Calculations

The system provides automatic conversions between salary and hourly rates:

How It Works:

• Annual to Hourly: Salary ÷ 2,080 hours = Hourly Rate
• Hourly to Annual: Hourly Rate × 2,080 hours = Annual Salary
• Customizable: Annual hours can be adjusted in Advanced Settings

Step 4: Setting Effective Dates and Change Reasons

Effective Date Configuration

Current Date (Default):

• Changes take effect immediately
• Most common for routine adjustments
• Automatically selected when creating new changes

Future Date:

• Schedule compensation changes in advance
• Useful for planned increases or promotions
• System will apply changes on the specified date

Past Date (Limited):

• Correct historical records or retroactive changes
• Limited to 30 days in the past (configurable)
• Requires additional justification

Change Reason Documentation

Always provide a clear reason for compensation changes:

Common Change Reasons:

• Annual merit increase
• Performance-based adjustment
• Promotion or role change
• Market adjustment
• Retention increase
• Error correction
• Initial compensation setup

Best Practices:

• Be specific and professional
• Include performance factors if applicable
• Reference relevant policies or guidelines
• Keep records for audit and compliance purposes

Step 5: Validation and Error Prevention

The system includes built-in validation to prevent common errors:

Automatic Validations:

• Minimum Wage Compliance: Ensures hourly rates meet legal minimums
• Reasonable Ranges: Flags unusually high or low compensation amounts
• Calculation Accuracy: Verifies conversion calculations are correct
• Date Logic: Prevents invalid effective dates

Manual Review Checkpoints:

• Review all fields before saving
• Verify effective date is correct
• Confirm change reason is documented
• Check that compensation type matches employee status

Step 6: Saving and Approval Process

Immediate Changes (Auto-Approved)

For small changes within auto-approval thresholds:

1. Click Save Changes
2. System automatically approves and applies the change
3. Employee compensation is updated immediately
4. Audit trail records the change

Changes Requiring Approval

For larger changes exceeding thresholds:

1. Click Submit for Approval
2. System routes to appropriate approver based on change amount
3. Approver receives notification and reviews change
4. Upon approval, change is applied automatically
5. All parties receive confirmation notifications

✅ Success Indicators

You’ll know you’ve completed this correctly when:

• Employee’s compensation information is accurately entered
• Compensation type matches the employee’s actual status
• Effective date reflects when the compensation should take effect
• Change reason is documented and clear
• System validations pass without errors
• Appropriate approval workflow is triggered (if required)

🔧 Common Scenarios & Solutions

Scenario 1: New Employee Setup

Situation: Adding compensation for a newly hired employee
Steps:

1. Navigate to the employee from User Management or Compensation Management
2. Click Edit to add initial compensation
3. Select appropriate compensation type (usually Salary or Hourly)
4. Enter starting compensation amount
5. Set effective date to start date
6. Add “Initial compensation setup” as change reason
7. Save changes

Scenario 2: Annual Merit Increase

Situation: Applying performance-based salary increase
Steps:

1. Review employee’s performance data and merit recommendations
2. Access employee compensation record
3. Edit compensation with new salary amount
4. Set effective date for the increase (often start of new fiscal year)
5. Document reason: “Annual merit increase based on performance review”
6. Submit for approval if required by policy

Scenario 3: Promotion with Compensation Change

Situation: Employee promoted to new role with salary adjustment
Steps:

1. Ensure job title and department are updated in User Management
2. Access compensation record
3. Update compensation to reflect new role requirements
4. Set effective date to promotion date
5. Document reason: “Promotion to [New Title] - compensation adjustment”
6. Process through approval workflow

Scenario 4: Correcting Data Entry Error

Situation: Previous compensation entry contains incorrect information
Steps:

1. Access employee compensation record
2. Review compensation history to identify error
3. Edit current compensation with correct information
4. Use effective date that matches original intent
5. Document reason: “Correction of data entry error - [specific details]”
6. Save changes and notify relevant parties

Scenario 5: Converting Hourly to Salary Employee

Situation: Changing employee from hourly to salaried status
Steps:

1. Access employee compensation record
2. Change compensation type from “Hourly” to “Salary”
3. System will suggest annual equivalent based on current hourly rate
4. Adjust salary amount as appropriate for new status
5. Set effective date for status change
6. Document reason: “Conversion from hourly to salary employee”
7. Update employee classification in User Management if needed

💡 Pro Tips

Efficiency Tips:

• Use Bulk Operations: For multiple similar changes, consider the bulk update feature
• Template Reasons: Create standard change reason templates for common scenarios
• Regular Reviews: Schedule quarterly reviews to keep compensation data current

Data Quality Tips:

• Double-Check Calculations: Always verify the system’s automatic conversions make sense
• Consistent Formatting: Use consistent formats for change reasons and documentation
• Effective Date Planning: Consider pay period alignment when setting effective dates

Approval Workflow Tips:

• Pre-Approval Communication: Discuss significant changes with approvers before submitting
• Documentation: Include supporting documentation for large changes
• Timing: Submit approval requests well before effective dates to allow processing time

📚 Related Topics

• Compensation Analytics Dashboard: Analyze compensation trends and equity
• Bulk Operations Guide: Manage multiple employees efficiently
• Audit Trail Guide: Track and review compensation changes
• Merit Matrix Integration: Performance-based compensation

❓ Need More Help?

Can’t find an employee? Check that they exist in User Management and are associated with your business
Validation errors? Review the error message and ensure all required fields are completed correctly
Approval delays? Contact the designated approver or check approval workflow settings
Questions about compensation policy? Consult your HR policies or contact your HR administrator

This guide covers individual employee compensation management. For bulk operations across multiple employees, see the Bulk Operations Guide.